European Stocks Gain as Banks Rally on France, Spain Bond Sales

Jan. 19 (Bloomberg) -- European stocks gained for a fourth
day, extending a five-month high for the Stoxx Europe 600 Index,
as Spain and France sold bonds at lower yields and fewer
Americans than forecast filed claims for jobless benefits.

Commerzbank AG led a rally in financial shares, surging 15
percent, after outlining measures to boost capital. Alstom SA,
the world’s third-largest power-equipment maker, jumped 14
percent after predicting “strong” orders in its fiscal fourth
quarter. Carrefour SA, the biggest retailer in Europe by sales,
dropped 1.1 percent after saying profit was at the lower end of
its forecasts.

The Stoxx 600 gained 1.2 percent to 256.57 at the close of
trading, the highest since Aug. 2. The gauge has advanced 4.9
percent in 2012, the best start to a year since 1989, as reports
around the world added to optimism that the economy is
strengthening. Greece’s government headed into a second day of
talks with private creditors today in a push to reach an accord
that would slash the nation’s debt.

“The results from the Spanish and French bond sales are
good,” said Manish Singh, the London-based head of investment
at Crossbridge Capital, which has more than $2 billion under
management. “But the debate on the Greek debt deal with private
investors is damping the optimism. Unless the deal is in the
bag, I don’t think the market will rally on successful auctions
alone.”

Greek Talks

Greek Prime Minister Lucas Papademos is racing to tie up
the accord, key to a second financing package for the cash-strapped country, before a March 20 bond payment that will cost
14.5 billion euros ($18.6 billion) Greece doesn’t have.

France auctioned 7.97 billion euros of two-, three- and
four-year notes in its first sale of medium- and long-term debt
after losing its AAA rating at Standard & Poor’s last week.
Yields fell on all maturities.

Spain sold 6.6 billion euros of bonds maturing in 2016,
2019 and 2022 today, compared with a maximum target for the sale
of 4.5 billion euros. The yields on the 2022 and 2019 securities
declined, while the 2016 borrowing costs increased.

“Investors all heave a sigh of relief as the bond auctions
are taking a successful course,” said Peter Braendle, who helps
manage $60 billion at Swisscanto Asset Management AG in Zurich.
“The market has developed rather pleasingly, despite France’s
downgrade.”

ECB Measures

European Central Bank Executive Board member Joerg Asmussen
said the ECB has a range of further non-standard policy
measures.

“There is a whole range of further unconventional measures
by the ECB, for example the liquidity operations with full
allotment and a duration of as much as three years that was
decided in December,” he said on Deutschlandfunk radio today.
All non-standard measures are “temporary by nature,” he added.

In the U.S., initial jobless-benefit claims plunged by
50,000 to 352,000 in the week ended Jan. 14, the lowest level
since April 2008, Labor Department figures showed. The median
forecast of 41 economists in a Bloomberg News survey had
projected a reading of 384,000.

Bank of America Corp., the second-largest U.S. lender,
swung to a fourth-quarter profit as the company sold assets and
built capital faster than expected. EBay Inc., the largest
Internet marketplace, reported sales and earnings that topped
analysts’ estimates.

Index ‘Overbought’

The Stoxx 600 became “overbought” for the first time in
14 months today, as the 14-day Relative Strength Index, which
tracks momentum by comparing closing prices with daily trading
ranges, rose to 70.47. When the RSI climbs above 70, technical
analysts say the underlying security is likely to fall. The RSI
last closed above 70 on Nov. 9, 2010.

Commerzbank surged 15 percent to 1.62 euros, the biggest
jump since October. Germany’s second-largest lender said the
measures it can take to boost capital or reduce the equivalent
in risk-weighted assets by June 30 total 6.3 billion euros,
outstripping the 5.3 billion euros required by the European
Banking Authority.

A gauge of banks outperformed all 19 industry groups in the
Stoxx 600, climbing 6.2 percent as Huw Van Steenis, an analyst
at Morgan Stanley in London, said the market “still
underestimates the potential impact of the European Central
Bank’s support for banks to reduce systemic risk.”

Alstom jumped 14 percent to 28.15 euros, the biggest gain
since 2008. The company said it has more than 1 billion euros of
announced contracts yet to be booked in its fiscal year, which
runs through March.

William Hill Plc rallied 6.3 percent to 223 pence. The
betting-shop owner said full-year performance is in line with
analysts’ estimates, with revenue expected to increase 6 percent
and operating profit of about 274 million pounds ($423 million).

Porsche SE rose 8.3 percent to 47.10 euros after Manager
Magazin reported that the German sports-car maker offered to
settle claims by U.S. investors tied to its failed takeover
attempt for Volkswagen AG in 2008. Porsche made the offer
dependent on the investors waiving possible new claims in the
future, the magazine reported.

Swiss Re Chief

Swiss Re Ltd., the world’s second-biggest reinsurer, added
4.1 percent to 51.60 francs. The company said Michel Lies, the
chairman of the reinsurer’s global partnerships, will succeed
Stefan Lippe as chief executive officer in February.

The appointment “is somewhat unexpected, but keeps
continuity and long standing reinsurance experience at the top
position,” Stefan Schuermann, an analyst at Vontobel Holding
AG, wrote in a note to clients today.

Carrefour retreated 1.1 percent to 17.27 euros after saying
2011 profit was at the lower end of its reduced forecast range
after fourth-quarter sales declined.